Page 78 - DMGT551_RETAIL_BUSINESS_ENVIRONMENT

Unit 3: International Retailing: Internationalization and Globalization

Lander, 2007: 5). Herein lies a key issue that retailers must take into consideration when Notes
moving into international markets: regulation. In this case the regulatory environment
proved to be very favourable, allowing Whole Food Markets a competitive advantage in
the market. Indeed, with its dining experience, certain commentators are comparing its
offer, not to the UK domestic grocery rivals such as Tesco, but the premium end food halls
belonging to London’s exclusive department stores such as Fortnum and Masons, Harvey
Nichols, and Harrods (Lander, 2007).
That said, the arrival of Whole Foods Market is creating competition in the UK grocery
market for share of the growing organic food market. The large UK grocery retailers,
Tesco, Asda, Sainsbury, and Morrisons, are all busy building market share in this lucrative
and expanding area. According to the Institute of Grocery and Distribution, UK shoppers
spent £1.6 billion on organic products in 2006 and this figure is predicted to rise to £2.4
billion by 2011 (Rigby, 2007b). Waitrose, which entered the organic market earlier than
other retailers, currently has an 18 per cent market share, despite its modest 3.6 per cent of
the overall grocery market. Marks & Spencer has a 7 per cent share of the organic market
(Rigby, 2007b). While Waitrose has traditionally been seen to be an upmarket food retailer
located predominantly but not exclusively in the south of England, its recent announcement
to open 180 premium fresh food supermarkets is an acknowledgement of its determination
to grow its market share and compete head-on with the newcomer Whole Foods. It would
seem, from comments by David Lannon, that Whole Foods Market has major plans for
expansion in the UK. According to him, the UK has the same demographic group as that of
California in terms of population and wealth. Whole Foods Market operates forty-five
stores in California alone. Given these statistics, it is interesting to note that Tesco chose
California as a location to enter the US market with its fascia ‘Fresh and Easy’, where it
now competes with Whole Foods Market on its home territory.

Whole Foods Market is still expanding in its domestic market, yet it is seeking opportunities
to expand its niche offering to the international marketplace. Its motto, ‘Whole Foods,
Whole People, Whole Planet’, has connotations of global domination.
Whole Foods Market’s arrival in the UK would seem to have impacted competitors,
consumers, and suppliers alike. This demonstrates the impact of international retailing—
all this with the arrival of one new shop.
Questions:
1. What factors could be motivating Whole Foods Market to internationalize its
operation?
2. Discuss the reasons for Whole Foods Market’s international market selection location
decisions.
3. How is the arrival of Whole Foods Market in the UK likely to impact on existing
competition in the market?

4. Which companies would you consider Whole Foods Market’s direct competitors in
the UK? How have these companies responded to the entrance of Whole Foods
Market?

3.9 Summary

 International retailing is an essential ingredient for the global economy. International
retailing satisfies the increasingly complex and demanding needs of global consumers.

LOVELY PROFESSIONAL UNIVERSITY 73